9911796707
TMI Blog1998 (10) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- under Section 34 of the Central Excises and Salt Act. He has also imposed a penalty of Rs. 1,00,000/- under Rule 173Q of the Central Excises and Salt Act, 1944. While coming to the conclusion on this aspect of the matter of classification, the Collector has held that the assessee had declared their goods in their classification list No. 391/R-X/87 w.e.f. 26-11-1987 that their products fall under the category of Textile products and articles of a kind suitable for industrial use under Chapter Heading 5909.00. He has held that their products is combined with more layers of Adhesive coating and release paper and used for industrial purpose. He has held that the scope of Heading 59.09 is restricted to good specified under Chapter Note 6 of Chapter Heading 59.09, according to which the goods manufactured by the party do not fall under any of the illustrations under the said Chapter Note. He has further observed that according to Chapter Note 6(b), the textile articles covered under Heading 59.09 have been restricted to goods of a kind used for technical purposes for example textile fabrics and felts, endless or fitted with linking devices, of a kind used in paper-making similar mac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtmental officers found that the appellants were working on job work basis on behalf of M/s. Aero Group of Companies, who were supplying all the raw materials. Accordingly, the value of the raw materials were obtained from the consignee i.e. Aero Group of Companies and to arrive at the assessable value of the goods manufactured by the party, the value of the raw materials supplied by Aero Group of Companies (grey fabrics, LDPE, Adhesive, release paper) plus the value of job charges were taken into account. It was found that the party had manufactured and cleared the sugar coated fabrics, falling under Chapter Heading 5903.11 of Central Excise Tariff Act, 1985, valued at Rs. 42,58,788/-, Rs. 39,32,642/- and Rs. 28,72,661/- during the years 1985-86, 1986-87 and 1987-88 (upto 16-11-1987) and evaded the Central Excise duty to the tune of Rs. 97,967.90 after giving the benefit of Notification Nos. 273/86 and 175/86. Similarly, the party had manufactured and cleared Adhesive Coated Fabrics falling under Chapter Heading 5906.90, valued at Rs. 35,28,706/- and Rs. 28,83,520/- involving Central Excise duty amounting to Rs. 10,58,612/- and Rs. 8,65,056/- during the years 1986-87 and 1987-88 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to clear the goods without payment of duty. It was on record that all the goods were being used for the manufacture of shoe upper which were subsequently exported. The manufacturers of shoe rightly paid duty as they were entitled for duty draw-back. They had stated that the item adhesive coating fabrics had been classified under sub-heading No. 5909.00, and hence the department cannot reclassify the goods under different heading for the previous years, hence the proceedings initiated against them was misconceived. 4. It was also stated that the manufacture of adhesive coated fabrics involves use of cotton fabrics as base material. This is subjected to application of adhesive in a coating machine and thereafter, the same is covered with the release paper i.e. wax paper. Thus at the time of clearance of release paper is affixed on the goods. The fabrics despatched from their premises is further consumed for industrial purpose. As per Note 6 to Chapter 59 it is clearly classifiable under sub-heading No. 5909.00, and the same is specified under Notification No. 175/86-C.E. It was stated that during the year 1986-87 they had been availing the benefit of Notification No. 77/85 maki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n take a different stand. He supported the order passed by the Collector. 7. We have carefully considered the submissions made by both the sides and have perused the order. We are not impressed with the manner in which the learned Collector has applied his mind in this case. Admittedly, the classification list had been approved by the department after the visit of the officers under Heading 59.09 in respect of adhesive coated fabrics. In the classification list the appellants have clearly described the item as Textile product and articles of a kind suitable for industrial use : (i) Drill Cloth with Adhesive coating ; (ii) Markeen cloth with Adhesive coating. The above textile fabrics at Sr. No. (i) and (ii) are combined with more layers of Adhesive coating release paper and to be used in Industry only." The superintendent had approved the classification and the assessee had been paying duty under Heading 5909.00 with effect from 26-11-1987. The Collector has held that they should have indicated the use of the item in the shoe industry. The appellants have clearly indicated the use of the item in industry only . The heading 59.09 also clearly describes the goods to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extile flocks or with preparations containing textile flocks) . In view of the fact that the item in question is appropriately classifiable under Heading 59.09 as the same is an article of a kind suitable for industrial use and the same has been accepted by the department for the period from 1-7-1987, therefore, this heading has to be accepted as the correct heading for classification purpose. The Collector has applied Note 6(a) of Chapter 59 to exclude the item under Heading No. 59.09 on the ground that the goods manufactured does not fall under any of the illustration under the said Note. We are not agreeable on this reasoning as the item is not excluded and Note 6(a) refers to textile products in the piece, cut to length or simply cut to rectangular shape . Note 6(a)(i) refers to textile fabrics, felt and felt-lined woven fabrics, coated, covered or laminated with rubber, leather or other material, of a kind used for card clothing, and similar fabrics of a kind used for other technical purposes . The item clearly falls within this note. In that view of the matter, we confirm the classification of the item adhesive coated fabrics under sub-heading No. 5909.00 as adopted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng enquiries before approving the classification list. The pro- per officer is expected to approve classification after making such enquiries as he deems fit. It was pleaded before us that they were under genuine believe that goods were exempted. There could be a doubt in regard to classification list as borne out by Circular No. F. 59/9/3/90-C.B.E.C., dated 23-11-1990 of C.B.E.C. which examined the classification of such goods with reference to Chapter 48, Chapter 59 and Chapter 64 and in particular CTH 59.09. It is, therefore, reasonable to presume that there could be a bona fide doubt in the mind of the appellants. Mis-statement with intent to evade payment of duty, therefore, has not been clearly established, particularly when it is pleaded by the appellants that all the goods were exported and had they paid duty, they would have got draw-back of duty and therefore they could not be guilty of any intent to evade duty. 12. I therefore agree that demand of duty beyond 6 months is time barred. Sd/- (Shiben K. Dhar) Member (T) POINTS FOR DETERMINATION 13. In view of difference of opinion between the Members, the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Collector of Central Excise v. Unitac Industries - 1994 (71) E.L.T. 836 (Tribunal) it had been held that the cloth based self-adhesive tapes for industrial use were classifiable under sub-heading No. 5909.00 and not under S.H. No. 5906.90 of the Tariff. The Departmental Representative confirmed that the goods are the same as were the subject matter of the Board s Circular and that of the Tribunal s clarification aforesaid. 19. In view of the submissions made by both the sides, I agree with the views taken by the learned Member (J) that the goods in question were classifiable under sub-heading No. 5909.00. 20. The file may now be placed before the Original Bench for further necessary action. Sd/- (Lajja Ram) Member (T) Dated 24-7-1998 MAJORITY ORDER 21. In terms of the majority order the item Adhesive Coated Fabrics falls under sub-heading 5909.00 as claimed by the appellants and in that view of the matter, the appeal is allowed. Sd/- Sd/- (V.K. Ashtana) (S.L. Peeran) Member (T) Member (J) Dated 14-10-1998 Date ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
